Video: General Points Regarding Gift Tax

In this lesson, Nick Palazzolo, CPA, demystifies the ins and outs of gift tax, a fundamental topic often encountered in federal taxation. He provides insight into the definition and responsibilities surrounding gift tax, emphasizing key concepts such as the annual exclusion and the responsibilities of the donor versus the recipient. Along with a detailed explanation of gifts that qualify for unlimited exclusion, Nick illustrates how certain direct payments to educational institutions, healthcare providers, and charitable organizations can circumvent the gift tax. The discussion also covers present interest gifts, essential for the annual exclusion, and contrasts them with future interest gifts that don't qualify. By addressing common exam topics with engaging examples, Nick ensures a comprehensive understanding of gift tax regulations, including special considerations like the generation-skipping transfer tax and the implications for gifts made across multiple generations.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Here's some good general points regarding gift tax. Now we've got gift tax being a federal tax. Keep in mind, that's 99% of what we're seeing in this exam is federal taxation. We're not really dealing with States. We mentioned States and we mentioned States and local municipalities and their impact, but it's far and few between. Federal tax imposed on the transfer of property or assets from one person to another when nothing or less than full consideration is received in return. So that in reality, yeah, distinguishing between, you know, in the real world, distinguishing between a transaction and a gift may be difficult, but for the purpose of the exam, we're not going to really have to determine if this was a gift or not. It'll pretty much tell you this was a gift. The person giving the gift, the donor is generally responsible for paying the gift tax. As we saw, here are some important points. Well, we've got this annual exclusion. Now each donor can exclude gifts up to the annual exclusion, which is an amount that is constantly changing and that will be available here for you in the resources. So definitely open that up and memorize the amount. It's been 12,000, 13, 14, 15, 16,000, 17,000. It just keeps going up basically by a thousand dollars roughly every year. So without triggering any gift tax, this amount is going to be indexed for inflation. As we said, changes year to year for couples filing married jointly. The exclusion is double as is with a lot of exceptions and exclusions. It's a main tax reason to get married, right? To get that double dip on that. So yeah, have that memorized and we'll see a lot of examples. I know you all love them

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Trusts, Estates, Gift Tax, & Tax-Exempt Organizations

Module: 4 Concepts, 35 Videos

Gift Tax and Estates Overview

1:49

Introduction to Gift Tax and Estates

1:52

General Points Regarding Gift Tax

8:57

Complete and Incomplete Gifts